405. How to Instill a Culture of Speed, Lessons from Scaling Merge to 8000 Customers, and the Future of Software Integration (Shensi Ding)

405. How to Instill a Culture of Speed, Lessons from Scaling Merge to 8000 Customers, and the Future of Software Integration (Shensi Ding)

Shensi Ding of Merge joins Nate to discuss How to Instill a Culture of Speed, Lessons from Scaling Merge to 8000 Customers, and the Future of Software Integration. In this episode we cover:

  • Founding a Company to Solve Integration Problems in the Workplace
  • Product Market Fit and Customer Acquisition Challenges
  • API-First Company Challenges, Speed, and Quality
  • Hiring Culture and Growth

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Transcribed with AI:

Our guest today is Shensi Ding, the co-founder of Merge. Merge integrates HR, payroll, and a variety of other platforms into a unified API. The business has raised more than $70M from some of the most prominent investors including Addition, Accel and NEA. Prior to co-founding Merge, Sensi was an investor at SilverLake and the Chief of Staff at Expanse
Sheโ€™s a co-founder at Merge, a Series B startup that provides a single API for all B2B integrations. Prior to Merge, she was a chief of staff at a fintech company, specializing in payments and lending.
Shensi, welcome to the show!
Thanks for having me. I really appreciate it. Of course, I’ve
been looking forward to this one. So we’ll be talking a lot about merge. But prior to even getting into the sequence of events that led to starting merge. I’m always curious when meeting founders to hear a bit about their upbringing. So were you always entrepreneurial growing up? Or can you share a bit about your background even prior to starting the business?
Yeah, the answer is no, I was definitely not I grew up in the suburbs outside of Boston, where there was really not much to do. And so that’s actually how I ended up getting into coding, because I just have long summer is just nothing but like laptop. And just like random things. I’m also an only child. And so I discovered the internet, I started learning how to make websites. And it was just an amazing experience for me, but I definitely was not entrepreneurial. I was really curious. And I liked testing things. And I liked building things. But in no way without ever thinking through, like, how do I monetize this? How do I make a business out I was very much just like experimental. But yeah, I grew up in the suburbs outside of Boston really got into coding and decided that I wanted to become a software engineer and learn computer science in college, I looked up a lot of the best engineering schools and was lucky enough to get to Columbia. So that’s how I ended up being here.
Interesting. So I guess what, what was the sequence of events that led to founding merch?
So freshman year, I became good friends with guiding Gil, because we were in all the same classes together, we became really good friends and senior year, he actually ended up becoming Engineering Student Council class president and vice president. And in your small world of college, you thought you think that’s very, very cool. You know, you’re on top of the world. And you’re really making a big difference. But it was actually a really great experience for me and Gil, to my future co founder to learn what it was like to work together in a way that you don’t really get to see with a lot of your close friends. And one thing that I really valued about Gil, that ended up becoming true when we started merge was that whenever he said he would do something, he always did it. And that’s really rare. That’s a really rare quality to have. And I very much appreciated now that I’ve become in the professional world. And so after school, we still say good friends, he I ended up actually staying in New York for a few more years after, but when I moved to San Francisco, he helped me find my apartment, he helped me negotiate my car. And it was great, because both of us then later on ended up at startups in San Francisco, we would continue eating for dinner, hanging out talking about work. And one thing that both of our companies was working into was the problem with integrations. And so it was really interesting to be able to talk about work, things that were going sorry, reset all that. But what’s out there, what your what your
what you read expanse, right? Was it it was a problem that you face that expands personally.
Yes, so I was Chief of Staff to the CEO of expanse. And it was interesting, because I was seeing a lot of what were hot topics in the executive sink. And around 2019 or so one thing that just kept coming up was ticketing integrations and how it was impacting the sales team. The sales team, as you’re aware, is the first to see if there’s any gaps or if there’s anything that’s happening in that in, in competitive deals against other companies. One thing that was really starting to hurt us was the fact that we didn’t have any integrations, the only way to export data was to download a CSV and re upload every single single time, we wanted to keep the data in sync. And it was becoming really unsustainable for our customers. So we tried to outsource the building of integrations like you ServiceNow Jira, and it was really difficult because the contractors just wrote horrible code, we couldn’t even really use it. So then we had to try again, hire a team of engineers in Atlanta just to focus on integrations. And it was very, very expensive. It was also pretty time consuming. The team was fully consumed by these integrations, and after a couple quarters, and we launched our first one. And I think just seeing that from a p&l perspective is really interesting for me, because as a former engineer, I was thinking, like, why is this so difficult? And I think it’s probably something that a lot of people now when they look at merge, they think, why is it so difficult, but I was lucky enough to actually have my best friend be head of engineering at a recruiting tech company where he personally had to build these integrations. And he said, it almost destroys life. So I think just hearing how horrible it was, was my best friend who’s actually doing this as an outsider who’s just seeing it from p&l perspective. It started getting the wheels turning so thinking through like, why has no one solved this yet? Why is this now a more more dominant problem, and what can we do that would actually be a solution?
Yeah. So I guess how would you answer that question Why was now the right time three years ago when you were starting merge in? I don’t want to blow the question too much. But relative to tre IO and others that were available at the time, how do you fit in relative to the landscape of other integration API companies that were on the market.
The reason why this became a bigger problem was because the onus of offering integrations went from the buyer to the vendor. Previously, it was totally fine for you to sell to different vendors and be like, hey, buyer, now you have to connect us, we don’t have an integration with each other, we’re telling you to have to connect to us, because there’s just not that many options out here. So you’re just gonna have to deal. And so that’s where an ecosystem of like tre Kado, Zapier, all of these, like products ended up emerging to solve that issue. And it was especially great for creating automation, helping with internal business use cases. And also just solving that problem, which is the buyer buys to vendors that don’t have an integration, I now need to connect them. But as there was more more VC money, there was also proliferation of SaaS, and there’s just so many vendors out there. And it gave me the firepower to choose between two vendors were one offered integrations that were just immediately out of the box, or one where I would also have to buy third vendor and have to connect it to a vendor that I already own. It was it was a no brainer. And it was also going to keep getting worse, there was going to be so much sass that was built on top of other platforms, and it was never going to get better, there was not going to be extreme consolidation, where you’re forced to buy a whole ecosystem of one of one. And so elements are just moving in that direction. And no one is solving it. So I wanted to do it.
Yeah. It’s been about four years now. Is that right? Since you first started the company,
we were doing around a year of research, which is like nights, weekends, all of your previous jobs, and then we went full time around three years ago.
Got it for what’s one thing you wish you knew three and a half years ago, when you were first starting the business that you now know today,
that it keeps getting harder. I think at the time, I was like, wow, like, this is so hard. You know, no one knows about us. There’s haters all around us. And I was like, This is the hardest that’s ever going to be and it was really difficult getting going from zero to one is a really, a really like, you know, gut wrenching experience because no one believes in you. And especially if you’re creating a new category, no one wants to talk to you. And you really, it’s an uphill battle. But crazily enough, it keeps getting harder. And you just have to adapt as the founders for what the new business needs are, it’s not going to be the same as in the beginning where you’re personally coding your personally sourcing their personally, you know, selling everything. Now it’s it’s at scale. And so you have to figure out what are the main levers that you can do in order to make a major impact versus doing it yourself. So I think it just it just keeps getting harder. And it’s interesting to see that and even talking to founders that are way ahead of me like public company CEOs. It keeps getting harder. So I think I know that but it’s it’s still exciting. And I just wish I like I wish I acknowledged how magical it wasn’t early days, because we were just a really tight team. We were 100% in person. And we were together, you know, 14 hours a day that was really magical. And it’s hard to replicate that.
So we’ve obviously alluded to what merges but how would you describe the business in a little bit more detail and what some of the most typical use cases are for your customers who some of those customers are just a broader overview for the audience?
Absolutely. Merge offers isn’t allowed developers to integrate wants to offer full category of integrations to their customers. We currently cover seven different categories including hrs ATS, accounting, CRM, ticketing, file storage and marketing automation. The main use case for merge is you need to offer a lot of integrations within a single category to your customers. And you have to embed this in your product. If you don’t have these integrations, you’re essentially limiting your tab to companies to customers that are using vendors that you currently integrate with. So one example is ramp. They want as many hrs integrations as possible because they want a full company to be on board. And whenever they use ramp and ramp needed hrs integrations, if they integrate it with Workday, they would also need, you know, 100 other hrs providers, as well as building these integrations requires a full engineering team and 100% of their capacity. It’s not really sustainable for a company that has another core product to be doing this as well. And so that’s where merge comes in. Instead of having to integrate with every single API, individual API provider, getting the partnership, understanding the API, like scoping it out, and then also maintaining the integration permanently. Now they just iterate with us, and they’re done. We handle the maintenance. And we also have a lot of tooling for their customer success teams to see exactly what’s going on every API request, every user error, every activity all of us available emerge. And we really help Hands it off from engineers to allow Customer Success teams to fully own the experience.
One of the things that I was immediately curious about is how you chose your first set of integrations, because as you might There’s so many vendors out there. So when you initially broke ground with Gil, how did you choose which one two integrations to start with
good old ham analysis, I was looking at who we could sell to how many companies we could sell to and why it was broad enough. And hrs integrations were very broad. So we could sell to a lot of different types of companies. And they’re a closed garden. So I felt like it was an interesting challenge, where it would be really difficult to get the partnerships. And then once you get the partnerships, that would also be added value for the customer. But I also wanted another category, because our goal was to target every single category that’s out there for b2b companies, we are not single, we are not a single category, unified API, we are a platform of many unified API’s. And ATS was interesting for us because Gil actually had previous experience in it. It’s very complicated it there’s deep Read and Write use cases, it requires instant syncing adds an SMB, with an ATS might have millions of candidates, but it may be there’s not that many HR systems that have a million employees. And so the amount of scale for ATS would force us early on to invest in that, that quality, that would make us a better product. Overall, I think another thing that we were really interested in was just seeing what the cross selling opportunities were going to be by selling both categories to certain companies, we were very fortunate at that time, like, you know, remote work get started. So we got to sell to a lot of those types of use cases, people were really trying to experiment with different types of, you know, like, different types of product that might be interesting for people who are coming into the office. And so we found a lot of interests for merge immediately. So a lot of it obviously, was luck. But part of it, you know, we didn’t think at the time,
got it in how long did it take until you knew that you had product market fit because I was I was looking through the company’s fundraising history. And I believe there was a six month delta between when you raised your series seed and your Series A. So I’m figuring it was fast and furious out of the gate, but we’d love to hear what the path was between launching the product and establishing product market fit.
We raised our seed actually a year before he announced it’s not quite accurate, it probably took us probably was a full year or just over a full year before we ended up raising our series today. But I think we realized the product market fit when our product literally did not work. And people still want it. And I was like, Oh my God, why would they want to use a horrendous product, because it is a really difficult product to build. And it’s not possible to make it work with just one or two customers or even, you know, a few dozen customers, it requires 1000s of customers just hammering your product really battering us that you have to account for every single edge case that’s available. And I think for those early customers like we are eternally grateful for them, because it was really, it was a rough experience. We were not built for scale. We were learning a lot still. And yet they still believe in us. And they still want to use the product even though it did not work. So I think that’s what we do.
Was it challenging at all to get customers? Or were people immediately like, yes, sign me up and say we need this. Because people talk about that struggle out of the gate to get those early adopters.
I think for SMBs, it was pretty easy when we were selling to like other startups was pretty easy to get people to take a bet. And you know, everyone’s taking a bet on each other. It was like 2021, things were just crazy. Everyone was betting on each other back then. But when it came to enterprise, you really had to have like true logos. And we had to just keep climbing the local ladder to get to the point where larger companies would trust you. So I think when it came to SMBs, it was pretty easy. But the real challenge is when you want it to prove to you no bigger company, like we’re not going to, we’re not going to fall apart. If you just test us a little bit.
What would you say are some of the challenges that are unique to an API first company relative to that of a typical web app or marketplace, etc.
You only get a few shots. If your product sucks, no one’s gonna take another bet on you it’s over. So you really need to make sure that you’re high quality. And so we really spent, we spent a year before we came out of stealth because we really wanted to make sure that the product was gonna be battle tested enough into like with us testing ourselves. And even still, that wasn’t enough. So we really wanted to make sure we came out of the gate really strong, real much more coffee as common as we could be that the product was going to be a good experience for our customers. And I think that’s a much more challenging thing, because you can fake it till you make it with webapp. Like, no one’s really going to know what’s going on in the backend. But if you’re an API first company, you were a part of their infrastructure, and you are critical. And there’s no hiding when their customers are upset or angry. And you really need to make sure that you’re ready for that.
Yeah. And in this case, your users and themselves are devs, right, because they’re the ones interfacing with the product. Has that pose unique challenges at all because devs can be very particular in the way that they use products. They’re very community oriented. What what sort of challenges has been developer first owes for for merge.
I mean, they’re so smart that I love selling to developers are so smart. But they noticed everything I’d say there’s no hiding if something’s wrong, and if something’s wrong, they know exactly why something’s going wrong. Right? So I think the main thing is just they know what’s up and you can’t, you can’t make excuses. You can’t hide. That’s the most challenging part. But I, it’s, it’s so interesting. And a lot of our best ideas came from our customers who just, you know, went through it. And we’re like, I think this would be better if you did this, or here’s I saw those as bog here’s a solution for it. It’s challenging, but it’s really exciting.
One of the things that we talked about before the show is embracing this culture that is speed oriented, and it makes rapid decisions. I’m curious, how did you cultivate that culture that embraces speed? I mean, what have you found on that front that works? And specifically, like, what tactical advice do you have for founders deliberately trying to increase the speed of execution within their organization,
you just always have to be pushing for it. And it’s not fun, but you just have to do it. So every single time I feel like our company slowing down, I just have to have that nice conversation with the team being like, Hey, we’re slowing down, we need to pick this back up. And I think it’s like, again, I don’t want it’s not like anyone, everyone wants to be the bad guy, like no one wants to do that. But the worst outcome that I could possibly have for my team is that I stopped caring enough to do that. And then I give up, and then we just move to a halt. Because I think the natural tendency for people is to slow down, especially if no one’s pushing you. It’s my responsibility as a leader to continue making sure that I’m setting the speed. I’m pushing everyone. I’m also sending example for everyone. I should be working harder than everyone else in my company. It’s not fair to them if I’m not. So I think the promise that I make to team members when they join merge is that I will continue trying my best to push the pace, because it’s the right thing to do. And I don’t want all their efforts go to zero.
Did you have any learnings on that front though? Like specifically? Is it something that you’ve done in meetings? Whether it’s talking about moving up timelines? I guess, specifically, are there any changes that you’ve made in your own behavior, or the way that you run meetings, the way that you manage one on ones that has bred a faster organization?
I’ve always asked our team like, why are we just doing this today? Why are we just doing this? You know, tomorrow, next week, every single time I see that something’s happening next week, instead of today, there better be a really good reason why. And if it’s happening next week, is it going to be that much better if it happens next week versus this week? And if so, that’s the only reason why we should do that. Because the only way for us to sometimes make a decision when there’s no data is to just try something. And that’s the best way for us to be able to decide, is this working or not. So I always really try to encourage our team, let’s just do it today. So tomorrow, because it’s probably going to help us have the best result.
How do you think about the dilemma? And I’m sure you’ve gotten this before. But how do you think about the dilemma between speed and quality? Because if you’re going too fast all the time, sometimes things will break? Or maybe they’re not done to the quality that they need to be? How do you think about that trade off?
I mean, obviously, there’s a lot of customers using it. And we really want to make sure that it’s like very high quality, we’re testing it or we’re auditing it, we’re doing a bug bash. But I think if it’s something that’s more experimental, where no one’s no one’s using it, we don’t even know if someone wants to use it, then we should just get launched something and see. And I think the way that people waste a lot of time is if there’s just no information, and everyone’s just discussing, in theory, when you just like try something out versus just like waiting and like, you know, debating about it now, let’s get some data and then we can move forward from there.
Yeah, I guess when you reflect on the past three and a half, four years at merge, what would you say are the single best one to two decisions that you’ve made? Thus far?
Every hiring decision has been when I hired an amazing person, those were all that was always the best thing to do. Because there’s just so like, yeah, there’s so many things that I could never do that our team is so excellent at, and persuading that person to join this company, was the best thing I ever could have done.
Have you have you learned any like tips or tricks that you would pass along to other founders on sourcing great candidates or hiring great candidates in general?
Yeah, so when you go on LinkedIn, and you search a company, and you see that there’s 100 pages, literally go to all 100 pages, because that person might be a good fit, your companies might be impatient. 98 Don’t be too lazy. And there’s also you need to actually source people like great candidates aren’t going to just like randomly find you enjoy your shitty little company. No, you have to alcohol and you have to source them and you have to persuade them. And when you’re recruiting, it’s a practice where you’re like your sale. You’re not only practicing, like how to recruit but you’re practicing how to sell your product and your practice, you have fundraise, so you need to really practice sourcing candidates. Getting really mean emails are embarrassing, and then in persuading people to join your company, and then also recognizing if someone’s going to be a 10x performer or not, because the only way to do that it’s just getting so many data points of quality of TA that you end up, you end up getting intuition about it.
How do you how do you suss that out? Like if someone’s going to be 10x? Or not? Because everyone, everyone says, You need to find time x performers. But how do you how do you actually figure out if someone is going to deliver at that, at that level,
you can tell whether they’re not going to be a 10x. So I think what you’re looking for is two data points, that they’re not a 10x. performer, because sometimes you it’s you’re right, like you can’t tell sometimes I’m wrong, too. But the ways that I can tell someone’s not gonna be a TEDx performers, they don’t, they’re not prepared. They have no idea what we were doing. And they’re meeting with me the CEO, like how they present how they present themselves in the meeting, because in the interview, this is the best you’ll ever get someone so someone says things, or does things in the interview process that make you think, Hmm, I wonder if this person would be I would enjoy working with this person, or if this person really do push the needle or do a good job, they’re probably going to show up worse in real life. So you should always take that into account your three people.
Yeah, yeah, absolutely. Can you share with the future emerge looks like if I ask a question like, where are you guys taking the business?
Yes. So obviously, many more categories deeper within existing categories, multi product, I went IPO this this company, and this team is too good to be an internal integration team. It would be a shame if we ended up doing that. So I want to go all the way.
What what what’s top of mind right now, like what are the biggest challenges right now that you think about on a daily basis,
hiring and making sure the team quality and culture stays consistent? Though I’m very involved in recruiting still, I’m still doing sourcing, I think it’s one of the things that I can uniquely do that will make a difference for the company has recruited really great people. But I really want to make sure that the people who are joining merge come with the right intentions. And especially once we raise our series B, we’ve started getting different types of people are interested in the company less less so for, like missionary reasons. And that’s still really important. I think it’s really important to get people who have a lot of optimism about the company who aren’t here just because they like heard from our friends that it’s going to do well on people here because they really like like everyone they really believe in they want to be here for the long haul. So that’s that’s what keeps me up at night. I really, really want to make sure that we continue to have a really high bar for teen talent.
Yeah, absolutely. I mean, people is a constant struggle. fishin see what’s the best ways for listeners to connect with you and merge?
Yeah, so I’m available over email. Schutze, Emery hottub, also Twitter, Chelsea underscore. And also you can find me on LinkedIn too. I’m available on all channels. So feel free to message me anyway.
You want any any roles you’re hiring for right now?
Yes, we are currently looking for a head of growth marketing. And we’re always looking for demand and managers are also looking for presale solutions engineers. Yeah, we’re really hiring a lot everywhere. So just go on our careers page merch dot dev slash careers. Feel free to apply directly or ping me also if you want me to accelerate anything.
Awesome. All right. Well, thanks again for coming on the show. We look forward to doing this again at the IPO. Thank you.
All right, that’ll wrap up today’s interview. If you enjoyed the episode or a previous one, let the guests know about it. Share your thoughts on social or shoot them an email. Let them know what particularly resonated with you. I can’t tell you how much I appreciate that some of the smartest folks in venture are willing to take the time and share their insights with us. If you feel the same, a compliment goes a long way. Okay, that’s a wrap for today. Until next time, remember to over prepare, choose carefully and invest confidently thanks so much for listening
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